They can not deal directly with brokers.
Dealings with Customers.
In dealings with the public, the Authorized Dealers are governed by the Foreign Exchange Management Act (FEMA) and the rules and regulations framed thereunder, directives of the Reserve Bank and the rules of Foreign Exchange Dealers' Association of India.
Interbank Dealings.
As per the exchange control regulations, authorized dealers can freely buy and sell both spot and forward, any permitted currency against rupees or any other permitted currency from and to other authorized dealers in India. They can also freely correct imbalances in their own position such as overbought in spot position and oversold in forward position or overbought at one forward position and oversold at another, by making, appropriate swap operations in the currency with other authorized dealers in India. All interbank transactions should be reported to Reserve Bank on appropriate R returns.
Delivery in all interbank contracts is at buyer's option unless otherwise stated. 'Cash' or 'Ready' contracts are deliverable on the same day, 'Value next day' contract (Tom contract, tom standing for tomorrow) is deliverable on the day immediately succeeding the contract date, 'Spot' contract is deliverable on the second succeeding business day. In case the delivery date in a spot, value next day or forward contract is a Saturday or a holiday either at the contracting centre or at the centre of delivery of rupee funds or at the centre of delivery of foreign currency amounts, the contract is deliverable on the next working day, when all the said three centres are open. .
Most of the dealings in the interbank market are TT purchase and sales. In the event of late payment, i.e., delay in crediting the NOSTRO Account of the purchasing bank kept abroad, the selling bank is liable to pay interest for the overdue period at 2% over the prime rate of the bank specified by FEDAI Rules for each foreign centre concerned.
